In this report, I analyze the differences in loans owned by Fannie Mae between 2007 and 2019, focusing on the changes in the default rates, borrower credit scores, property occupancy status, debt-to-income ratios, and interest rates. Based on the two datasets in 2007 and 2019, I found that the default rate for loans was 9.02% in 2007, during the mortgage crisis, while in 2019, the default rate had significantly decreased to 0.2%, indicating a more stable period.

Figure 1 shows each state’s percentage change of default rate of loans relative to the national default rate in both years. In 2007, some states had higher default rates exceeding the national default rate(9.02%). For example, The default rate in Nevada increased by 257.1% compared to the national default rate (9.02%) and Arizona State increased by 174.5% compared to the national rate. This suggests that these states were significantly more impacted by the mortgage crisis in 2007; In 2019, default rates of west virginia state and vermont state were significantly higher than national default rate(0.2%).     

Next, I examine the average borrower credit scores in 2007 and 2019. The average credit score in 2007 was 726.04, while in 2019 it had risen to 761.31(calculated in codes). Figure 2 shows the distribution of credit scores for defaulted loans in 2007, with scores concentrated between 650 and 700. In contrast, Figure 3 shows that in 2019, credit scores were concentrated between 700 and 750, indicating that borrowers had higher credit scores in 2019. This suggests that in 2007, defaulted loans were more likely to come from borrowers with relatively lower credit scores.

In Figure 4, I observe that the Debt-To-Income ratio for loans in 2007 is concentrated around 40%, whereas in 2019 the ratios are noticeably lower. This indicates that in 2007 a larger portion of borrowers’ incomes were allocated to debt payments. Since higher DTI ratios are associated with greater financial risk, this may have contributed to a higher likelihood of default during that period.

In Figure 5, it shows that interest rates in 2007 were generally higher than in 2019, suggesting that loans issued during the mortgage crisis had higher borrowing costs. As a result, the financial stress caused by these higher payments likely contributed to the increased default rates in 2007. Next, I examine the default rates across different property occupancy statuses. Finally, I examine Figure 6. It suggests that in 2007, investor-mortgages exhibited the highest default rate 14.3%, showing that investor-mortgages were more likely to default. This can be explained that investor-mortgages, which are not for primary residences purposes, were more likely to default, especially in the loan crisis year. Besides, the average interest rate of investor-mortgages is 6.89%(calculated in codes), which is higher than the interest of two others(principal-mortgage: 6.45%; second-mortgage: 6.46%). This supports the above idea that higher interest rates are correlated with higher default risk. In 2019, default rates across all property types were significantly lower. Investor-mortgages had a default rate of 0.2%, principal-mortgages 0.2%, and second-mortgages 0%, reflecting the overall low default rate in 2019.

Overall, above data visualizations reveal the contrast between loan performance in 2007 and 2019: In 2007, the default rate was much higher, driven by factors like elevated interest rates, higher Debt-to-Income ratios, and lower borrower credit scores. Compared to 2019, the economic conditions in 2007 during the mortgage crisis caused considerable financial stress for a large portion of borrowers, making it more challenging for them to meet their loan obligations.

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Figure Appendix


Figure 1: Increase or Decrease of Default Rates by states relative to national in 2007(left) vs. 2019(right)



Borrower Credit Score of Defaluted loans in 2007

Figure 2: Borrower Credit Score of Defaluted loans in 2007



Borrower Credit Score of Defaluted loans in 2019 Q4

Figure 3: Borrower Credit Score of Defaluted loans in 2019 Q4



Analyzing Debt-To-Income Ratio between 2007 vs. 2019

Figure 4: Analyzing Debt-To-Income Ratio between 2007 vs. 2019



Comparing Interest Rate on Loans in 2007 vs. 2019

Figure 5: Comparing Interest Rate on Loans in 2007 vs. 2019



Comparing Default Rate of property occupancy status in 2007 vs. 2019

Figure 6: Comparing Default Rate of property occupancy status in 2007 vs. 2019